Nonprofits operate differently from businesses and so must be led differently, says Jim Collins, author of “Good to Great”.

An interview with Collins in the February issue of Bridgestar’s “Leadership Matters” publication focused on his recently-published booklet, “Good to Great and the Social Sectors.”

The booklet discusses distinctions between the types of leadership needed in the business and social sectors.

While businesses have more “executive” leadership, with decision-making power held by one or a few individuals, the social sector has “legislative” leadership, Collins says.

“In the social sectors, composed of a much more complicated governance and power structure,” he says, “rarely do we find a single individual…with enough concentrated power to make the big decisions by himself or herself.”

He says nonprofit leaders must use tools such as language, coalitions and persuasion to cultivate conditions for the right decisions to happen.

A factor the business and social sectors share, he says, is the importance of collaboration and the resulting development of discipline among leaders.

In both types of organizations, “under the right conditions and with the right mechanisms,” he says, “collaboration increases discipline, as you will be held accountable for high standards by your peers and colleagues.”

While businesses can easily measure their success in terms of profit, nonprofits must measure their success using other standards, Collins says.

He says nonprofits might measure success in terms of time donated by volunteers or board members, sustained cash flow, and the organization’s ability to cultivate emotional good will and shared ideas among supporters.

Collins also says nonprofits should be able to identify strong individuals as potential leaders and study leaders of successful nonprofits to better understand what it takes to be led well in the social sectors.
(Read more on Philanthropy Journal).